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RIL — MaaS — Mobility As A Service

RIL — MaaS — Mobility As A Service

  • In 10 years time, MaaS is predicted to be worth a staggering 1.76 Tn , a quarter of the entire transportation industry and to have completely revolutionized how we all live and work .
  • Due to the changing market landscape in fuel retailing business, every fuel retailer will have to rethink their fuel delivery model needs To Creat a Disruptive Converged Model of Fuel Retailing as a Hybrid of Refined Fossil Fuels, CNG, LPG, LNG, Aviation Fuel, Biofuels, Electricity and Hydrogen + Convenience Stores and what more ?
  • This also gives them an opportunity to build CYBER-PHYSICAL systems based fuel retailing model with converged value propositions which are discussed below.

What Changed in The Business Landscape :

  • With the fuel retailing sector reforms, the government has relaxed the norms for setting up petrol pumps allowing non-oil companies to venture into this business enabling private and foreign firms to enter Indian market.
  • While the existing licensing was on the basis of investments of minimum 2000 cr into hydrocarbons E&P, R&M, Pipelines or LNG terminals, the new rules allow companies with a net worth of 250 cr to sell petrol and diesel subject to the condition that they shall install facilities for marketing of at least one new generation alternate fuels such as CNG, LPG, Biofuels, Electric Charging and Hydrogen within three years of starting operations.
  • The retailer will necessarily have to set up 5 % of the total outlets in rural areas.
  • Global giants like Total SA of France, Saudi Aramco, BP Plc and Trafigura’s downstream arm Puma Energy are eyeing to enter Indian market.
  • State owned oil marketing companies IOC ( 27981 pumps), BPCL (15078 pumps), HPCL (15584 pumps) currently own most of the 65,554 petrol pumps in the country. While Nayara Energy ( Former Essar Oil) has 5344 outlets, Shell has 150 and we have around 1380. BP had secured a license of 3500 pumps few years back and now plans to start 5500 outlets alongwith RIL.
  • While the RIL starts new retail outlets with BP, to keep its competitive positions intact it has pioneered this transition into a converged model of fuel station which is enclosed.
  • New fuel pumps should marry younger EVs for a longer life*New pumps can be designed in a way that they serve both EVs and fossil fuel cars now and in future. *Joint operation by oil and utility firms would mean incentive to promote both sources of energy. *If oil firms don’t buy the hybrid energy station idea, the government should impose it on them.

The Design :

Hybrid Energy Stations

  • Companies can turn all their planned filling stations into hybrid energy stations that would have EV chargers as well as petrol, diesel dispensers, CNG/LPG/LNG, hydrogen all under one roof. This would, in just one sweep, turn oil firms into an ally and catalyst in the energy transition game, and secure their future.
  • New pumps are ideal candidates for this hybrid arrangement — operational pumps can have several constraints from their design (suited to serve fossil fuel cars) to lack of motivation of dealers to surrender fuel dispenser space and sales revenue for EV chargers that today offer little, uncertain income. Unsurprisingly, dealers and company executives reacted with stiff resistance to a recent request from Niti Aayog to set up EV charging facility at 1000 operational petrol pumps (not a big number given that state firms operate about 58,000 pumps across the country).
  • In new pumps, such resistance is unlikely as dealers enter the game knowing the new rules. They also bring in land parcels — the hardest and the most expensive component for a filling or a charging station. Using the same piece of land for both fueling and charging makes more sense than competing for the scarce resource.
  • Since the planned pumps are still being conceived, they can be futuristically designed in a way that they efficiently serve both fossil as well as electric cars today and have the flexibility to as efficiently serve them after their ratio changes in future. So, in future, as demand mix changes, charging points can slowly replace dispensers before the stations fully convert to electric.
  • Coexistence of chargers and dispensers mean dealers and oil firms remain relevant for decades while efficiently capturing gains from the current and future business. This model would be more robust than any standalone public charging stations many utilities, car companies or independent service providers have been planning, since it helps hedge risks and brings immediate cash flow.
  • But how would new hybrid stations compete with other operating fuel pumps today? These pumps would invest a little more than an ordinary fuel station (due to additional charging facility) and earn a little less on their investment (since there are fewer EVs on road today). For keeping pumps competitive, oil companies (not dealers) should bear the burden of additional capex. The government subsidy on building charging stations will keep that burden low.

Oil-Utility JV

  • To ensure that the operator has incentive to push the sales for both electric and fossil cars, such pumps will have to be operated not just by an oil company but a joint venture of oil and a utility or EV maker — there is always a risk that the dealer stays focused on fuel sale and keeps charging facility mothballed for years.
  • Oil companies have decades of experience in managing logistics and serving customers while a generator or a distributor comes with the technical competence of the power sector as well as an economic incentive to boost charging revenue (Distributors have had poor record in serving customers or collecting revenue and a partnership with oil company will benefit them). With the technical competence and incentive to serve EV customers better, an EV maker can help develop a robust ecosystem.
  • Hybrid stations could offer a mix of slow and fast chargers with highways being dotted exclusively with fast chargers.

A National Network

  • Now you may ask if we really need so many charging stations now. Oil companies are seeking to set up pumps at 78,500 locations. They have received applications for 95% of these locations. But the total number of stations that would finally come up could be far fewer than this as many applicants may find it hard to secure the land needed for setting up pumps. In the last such mega attempt by oil companies, five years ago, the success rate was barely 17%. At this rate, in this round, it should be about 13,000 fuel stations. But if the strike rate were to improve this time to, say 25%, it would mean a little less than 20,000 pumps, which is not a huge number given that these would be placed all over the country.
  • Second, do we really need a national footprint for EV chargers and shouldn’t these be slowly rolled out from big metro cities? Air pollution and climate change are the key EV policy drivers in the country. And these are as relevant to Delhi as to smaller cities. Of the 30 most polluted cities in the world, 22 are in India. In the table for world’s most polluted cities, Patna, Lucknow and Bhiwadi rank ahead of Delhi while Jodhpur, Muzaffarpur, Varanasi and Moradabad are just behind. Electric rickshaws are already popular in several smaller cities. A nationwide network of charging stations can be a big confidence-booster for potential EV owners.
  • So, it makes immense sense for oil companies to oversee the marriage of their new conventional pumps with younger EV charging stations. But if for some reason they can’t see the value in doing so, the government must force them to set up hybrid stations as it would be in the interest of oil companies as well as the society.

1. RIL Hybrid Fuel Lines Based Stations :

a. Refined Fossil Fuels / CNG / LPG / LNG / Aviation Fuel Lines : Discussed on this link.

b. Electrical Charging Stations Line : Discussed on this link .

c. Hydrogen Pump Line — Scalable Hydrogen Fueling Appliances and Electrolyzers : Discussed on this link .

d. BioFuels — Discussed on this link .

2. RIL Gigafactory / Battery Swap — Discussed in details on this link.

3. RIL Hyperloop Pod Taxi Network — Discussed in details on this link.

4. RIL Drone Based Mobility Service DaaS —Discussed in details on this link.

5. RIL’s Biggest Freight Aggregation / Hyper Local Network — Discussed on this link.

6. RIL’s Rural Agro Mobility — Discussed on this link.

7. Convenience Store Line ( A1 Convenience Stores ) :

  • Offering a variety of snacks and beverages along with other convenient items, all selected for their high quality to ensure that customers get the best available.
  • Featuring clean, well-lit stores, with easy-to reach shelves, fresh products and quick checkout.
  • RIL A1 stores are conveniently located with easy access for a pleasant and hassle-free customer experience.
  • RIL A1 is the convenient stop to refresh and move-on!

8. Kioskization — Inside Stations Kiosks for

  • RIL station locator,
  • Offers and competitions,
  • RIL fuels.
  • RELSTAR engine oils and lubricants.
  • RIL Cash Card.
  • AJIO Kiosks — As part of its omnichannel strategy, Reliance Industries (RIL) has opened AJIO ‘shop-in-shops’ in more than 100 Reliance Trends stores. The company, which launched its online fashion portal Ajio.com in April, is targeting shoppers with high-margin, curated fashion. The company has also deployed AJIO browsing kiosks across Reliance Trends stores to help customers order on the online platform from the bricks-and-mortar stores. RIL operates department chain Reliance Trends and Reliance Brands, which has partnered more than a dozen premium international labels including Diesel and Superdry. Reliance Retail has began its e-commerce platform Ajio and has launched kiosks in all of its Retail and Jio stores where customers can order online goods in-store with assistance. As part of Reliance Retail’s move to scale up its e-commerce platform and digitise rural India, the RIL has launched its offline-to-online scheme. The programme aims to get shoppers online for the first time. The kiosks allow shoppers to order products from the Ajio e-commerce platform in small, rural Jio brick-and-mortar stores. Shop staff will assist the customers when they order goods as it may be their first time using the internet. The goods will then be delivered to the store itself where customers will be able to pick them up. The scheme allows shoppers with neither internet nor a reachable postal address to shop online. The business said that the long-term plan is to connect all of its e-commerce sites with its offline Jio stores. Ajio was launched as Reliance Retail’s e-commerce platform in July 2016 at Lakmé Fashion Week. The platform focuses on fashion and retails a number of Indian and international brands such as Point Cove, Rio Girls, and First Class.
  • Smart Point Stores — RIL has started Kiosk outlets which are a smaller avatar of its Smart stores (a bigger format outlet) and will be present in the residential neighbourhood to serve the daily multi-purpose needs of consumers. These include grocery, pharmacy and assisted e-commerce. The company has moved fast, taking less than 45 days to launch the stores after announcing the concept. The stores will have a kiosk where a customer can order fashion and lifestyle products online, apart from a Reliance Digital point of sale where one can order electronic items. At present, these stores are run on a pilot basis in three regions in Maharashtra. The new stores, like the larger format, come with the same promise of a “minimum 7 per cent off on MRP” on all products. Besides assisting the JioMart venture, these stores will function as full-fledged grocery outlets, further deepening the Reliance Retail network in the country. At present, the larger format Smart stores are few and located far from residential neighbourhood, but the Smart Point stores have been opened closer to the shopper…within a short time frame, 18 Smart Point stores have been opened. This will augment RIL’s grocery play. In grocery, Reliance Retail has around 723 stores across 160 cities and during the third quarter of this fiscal they reported more than 61 million footfalls. At present, the consumption basket in its business is led by consumer electronics and connectivity, accounting for 32 per cent each. This is followed by grocery at 19 per cent, fashion & retail at 9 per cent and fuel retail at 8 per cent. Reliance had started JioMart pre-registration in December 2019, which is part of its new initiative to on-board kirana stores. JioMart is its food and grocery e-commerce venture. While the initiative is at a pilot stage, including a JioMart app, the brokerage added that the app offers multiple advantages of free delivery without minimum order value, thus having an edge over current e-commerce options, an assortment of more than 50,000 grocery products. Smart Point stores leverage cross-selling. Each Smart Point store has an AJio kiosk that enables customers to order fashion and lifestyle products, a Reliance Digital point of sale for ordering electronics, and a Jio Payments Bank counter. The firm is now working on a kirana-driven delivery model for grocery under its new commerce strategy. RIL’s previously announced new commerce initiative entails on-boarding kirana stores and digitising them via merchant POS machines. The concept was to leverage the network presence of kirana stores for RIL’s e-commerce initiative. Under this initiative, RIL started JioMart pre-registration in December last year. There were 154 Smart stores across 96 cities, and now within a short time frame, 18 Smart Point stores have been opened. This would augment RIL’s grocery play. The Smart Point store came across as a typical mini-market self-service neighbourhood food and grocery .

9. O2O Omnichannel — Cashier Less CheckOut — Discussed in details on this link.

  • Similar to the Amazon Go or
  • Alibaba Hemma stores.

10. Trans Connect : Total Fleet Management Solution providing services like First Fleet Program providing

  • Technology Based Services.
  • Superior Quality Fuel.
  • Trans Money.
  • Trans Manager.
  • Trans Planner.
  • Trans Info.
  • Trans Insurance.
  • Loyalty.
  • 24x7 support.

11. Connected Mobility App : NW18 digital publishing platform Overdrive for

  • Motoring tips and advice.
  • Driving Inspiration.
  • Motorsports.
  • RIL Motorist App.
  • RIL Car Care Range.
  • Take care of your Car App.
  • More for Motorists App.
  • Connected Cars Solutions App.

12. DOOH — Kiosks External — Discussed in details on this link.

  • Billions of people commute on the roads.
  • RIL fuel retails which shall be a major touch point with its large customer base.
  • Various Kiosk based interfaces with customers like the following integrated with NBIOT / RFID / NFC / 1D-2D Barcode Scanner / MSR / Thermal Printer / IC Card Reader makes an irresistible value proposition.
  • JIO recharge / merchandise Kiosk.
  • ATM’s Kiosk.
  • Bank Self Service Kiosk.
  • Book Store Self Service Station integrated with our times book store.
  • Market self-checkout Kiosk.
  • Airport Flight Information Kiosk.
  • Transportation e-gating and transportation hub self-service kiosk.
  • Signage.
  • Hospital self check in kiosk integrated with jiohealth app.
  • Medicine Dispensing Kiosk.
  • F&B Self Ordering Kiosk.
  • Theatre Ticketing Kiosk integrated with our Book My Show App.
  • Hotel Self Checking / Customer Survey Kiosk.
  • Retail Self Checkout Kiosk.
  • Queing and Self Checkout Kiosks.
  • Membership Service Kiosks for our Reliance One loyalty program.
  • Retail Product Information Kiosk.
  • Super Market Price Checker Kiosk.
  • Location Information Kiosk.
  • Restaurant Table Mount Self ordering Kiosk.
  • Public Information Kiosk.
  • Mall information mapping guidance.
  • Interactive Directions Kiosks.
  • Ordering Reliance Retail merchandise kiosks.
  • Apparel store mirror coating interactive signage.
  • Sport self entertainment and member retention terminal integrated with our Mumbai Indians portal/app.

13. Vehicle Telemetics

  • RIL is planning to foray into automobile telematics with the launch of a device that will control vehicle’s movement and alert owner about fuel and battery through a mobile app.
  • Reliance Jio is ready with a car connected device that will have multiple features like immobilise car at the time of theft, alert owner about car movement, locate car and also provide wi-fi within car.
  • The owner needs to use Jio sim in the device to avail benefits.
  • The company is in advance talks with automobile companies.
  • There are lots of factors that determine price, but price of the car connected device is estimated to be either equal to or less than its Jio’s mifi device which costs around Rs 2,000.
  • With help of Jio’s car management device, the owner will get information about the way his driver is driving the car, the movement of vehicle can be restricted within a geography, switch on AC of car from any remote location, get alert of car break etc.
  • Jio is working on modalities on its sales model for existing cars as well.
  • The device and application has been internally developed by Jio but the hardware device will be initially imported from China and is now indigenized.

14. Other Aspects Of Autonomous Cars, Connected Cars, Travellators, Shared Mobility Under Review

  • The past year was a pivotal one, with many important achievements across the disruptive dimensions of mobility: autonomous driving, connectivity, electrification, and shared mobility (ACES).
  • In 2019, electric-vehicle (EV) sales set another sales record globally, and EVs became much more prominent in the public awareness in major automotive markets, such as Europe.
  • Many more cities have announced and already partially implemented further regulation of private-car-based mobility. Some players demonstrated truly driverless cars without backup drivers, setting new milestones in autonomous driving.
  • Uber and Lyft-the two big disruptors in the ride-hailing space-went public in spring 2019.
  • Also in 2019, regulators began granting approval to drone deliveries and to electric vertical takeoff and landing crafts, with these types of vehicles flying for the first time.
  • However, 2019 was also a year of reality checks, as congestion and public-transportation woes reached new heights for cities around the world, realization timelines for technology like autonomous vehicles (AVs) were postponed, and some new mobility business models failed to win over investors.
  • Economically, global automakers had a tougher time in 2018 and 2019, with several headwinds: higher expenses required to meet stricter emission regulations, global trade tensions, and slowing sales in key end markets.
  • These triggered profit warnings at several large OEMs and suppliers.
  • Given that key risks for the industry remain elevated and that competition from new mobility attackers is intensifying, the road ahead remains bumpy, as today’s reality delivers a mixed picture for the future of mobility.
  • On the one hand, there are big expectations with regard to future technologies and business models; on the other hand, there is an urgent need for a “double transformation.”
  • In other words, preparing companies for the mobility of tomorrow also means making today’s business crisis resistant.
  • Please join us as we reflect upon this past year’s milestones and look ahead to what we expect will be the continued momentum and additional wake-up calls that will keep on shaping the movement of people and goods going forward.

Investments across the mobility landscape

  • First, we see continued acceleration of investments in the relevant technologies-with e-hailing, semiconductors, and sensors for advanced driving-assistance systems and autonomous driving still being the front-runners (Exhibit 1).

Exhibit 1 -

  • On a regional level, activity in the United States is strongest, but tech-intense locations, such as Israel, also play important roles in the mobility ecosystem.
  • And the automotive industry actually is quickly turning into a true mobility ecosystem.
  • OEMs have traditionally worked hand in hand with tier-one suppliers, but today, we are seeing the emergence of a broader ecosystem.
  • This ecosystem is coalescing, as high-tech players enter the market, incumbents form new partnerships, and tier-two suppliers cut in line to offer products and services directly to OEMs, thus bypassing tier-one companies.
  • As per analysis, an OEM would have to invest nearly $70 billion to gain a defensible position across the critical ACES technologies.
  • Hence, there is a renewed interest within the automotive industry for cooperation (Exhibit 2).
  • For decades, OEMs have shared the financial burden in core areas like engine development and production.
  • But given the challenges ahead, cooperation will become an even bigger success factor.

Exhibit 2 -

Let us now have a look at the 2019 highlights of each of the ACES trends.

Autonomous driving

  • For investors, executives, and enthusiasts alike, autonomous technology and self-driving cars have long been some of the most interesting areas within the future-of-mobility space.
  • This continues to be so.
  • But 2019 certainly was a year in which optimistic forecasts had to be scaled back to a certain degree.
  • Progress in AV technology was not as fast as previously anticipated; both value and premium OEMs-as well as tech players-revised their schedule for level 4 and level 5 applications, sometimes by years.
  • Yet the underlying logic for autonomous driving, especially in cities, remains intact.
  • We believe electric, shared AVs-also called robo-taxis or -shuttles-could address mobility’s pain points in cities (such as road congestion, crowded parking spaces, and pollution) while revolutionizing urban mobility, making it more affordable, efficient, user friendly, environment friendly, and available to everyone.
  • If integrated seamlessly in the public-transportation system, it will be an important enabler in reducing today’s share of private-car traffic (Exhibit 3).
  • Change vehicles: How robo-taxis and shuttles will reinvent mobility : To reduce the levels of uncertainty surrounding shared AV mobility, the experts have developed a detailed and holistic model based on a thorough fact base, consumer surveys, expert estimates, and extensive discussions with relevant stakeholders.

Exhibit 3 -

  • Of the global markets for AVs, China catches the eye (Exhibit 4).
  • It has the potential to become the world’s largest market for AVs.
  • In the base forecast, such vehicles could account for as much as 66 percent of the passenger-kilometers traveled in 2040, generating market revenue of $1.1 trillion from mobility services and $0.9 trillion from sales of autonomous vehicles by that year.
  • In unit terms, that means autonomous vehicles will make up just over 40 percent of new vehicle sales in 2040, and 12 percent of the vehicle installed base.”

Exhibit 4 -

  • While the new technologies will surely generate enormous value, no one can say where the economic profit will flow-or when.
  • It is also important to note use of 5G in the development of the mobility technology ecosystem.

Connectivity

  • Connected cars are poised to become potent information platforms that not only provide better experiences for drivers but also open new avenues for businesses to create value.
  • Conventional vehicles, once heralded as “freedom machines,” will evolve into information-enveloped automobiles that offer drivers and passengers a range of novel experiences, increasingly enhanced by artificial intelligence and intuitive interfaces that far surpass today’s capabilities.
  • The key success factor for connectivity services is the clear value proposition the offering has, either to an external customer or to an internal stakeholder.
  • It seems that this value is very often created only by combining data assets and capabilities from various partners.

The trends transforming mobility’s future

  • We have identified five levels of connectivity, each involving incremental degrees of functionality that enrich the consumer experience, as well as a widening potential for new revenue streams, cost savings, and passenger safety and security.
  • These levels reflect the potential for connectivity to stretch from today’s increasingly common data links between individuals and the hardware of their vehicles to future offerings of preference-based personalization and live dialogue, culminating with cars functioning as virtual chauffeurs.
  • Our research suggests that by 2030, 45 percent of new vehicles will reach the third level of connectivity [Exhibit 5], representing a value pool ranging from $450 billion to $750 billion.
  • Our surveys also indicate that 40 percent of today’s drivers would be willing to change vehicle brands for their next purchase in return for greater connectivity.”

Exhibit 5-

  • Connectivity in cars is predominantly driven by the proliferation of a more centralized software and of electrical- and electronic-component architecture.
  • As noted in our study “ Mapping the automotive software-and-electronics landscape through 2030,” this trend “will drive the market’s expected expansion through 2030 (projected at a 7 percent compound annual growth rate).
  • Significant variation is expected across the market’s segments” (Exhibit 6).

Exhibit 6 -

Electrification

  • While the signals are somewhat mixed for autonomous technology, the “E” in ACES- electrification -certainly gained momentum in 2019.
  • This development was triggered by two trends: tightening regulation-for example, in Europe-and rising customer demand.
  • EV sales grew to more than two million units globally in 2018: an increase of 63 percent on a year-on-year basis, and a rate slightly higher than in prior years.
  • Nevertheless, with a penetration rate of 2.2 percent, EVs still only represent a fraction of the overall light-vehicle market.
  • The ratio of battery EVs (BEVs) to plug-in hybrid EVs (PHEVs) held relatively steady from 2017” (Exhibit 7).

Exhibit 7 -

  • Projections for Europe indicate that automakers would need to sell up to 2.2 million EV units in 2021 alone to meet their fleet CO 2 targets.
  • That would be a steep ramp-up of EV sales in fewer than two years and equivalent to global EV sales in 2018.
  • This is a big task not only for the automotive industry but also for adjacent industries.
  • To power two million new vehicles, Europe would need the equivalent of about four gigafactories for the battery supply-and the additional raw materials.
  • To meet charging demand, 300,000 to 400,000 public charging stations would be required. OEMs are therefore moving quickly: to meet both regulator and customer demand, OEMs are significantly ramping up their battery electric vehicle (BEV) portfolios. Incumbent OEMs will bring more than 300 new BEV models to market by 2025” (Exhibit 8).

Exhibit 8 -

  • The challenge of making EVs profitable remains, but OEMs and their suppliers are working hard to address it successfully.
  • Advancements in battery technology, economies of scale in EV production, native EV design, and cooperation among OEMs can help bring down costs-which are currently still higher than for comparable internal-combustion-engine (ICE) vehicles (Exhibit 9).

Exhibit 9 -

  • The battery is by far the most valuable part of an electric car.
  • With demand rising, players across the value chain need to scale up sustainable battery production.
  • Across uses, from EVs to backup power generation-not to mention mobile phones and other consumer products-we estimate that current momentum will increase battery demand 14-fold between now and 2030.
  • In a more optimistic target case (with even lower battery costs), the increase could even be 19-fold.

Shared mobility

  • As in the other dimensions of future mobility, we see divided areas within shared or smart mobility as well.
  • No doubt, mobility-especially in cities-needs to become smarter to become sustainable (again).
  • Cities need to combine multiple modes of transport-including private cars, public transport, robo-taxis, robo-shuttles, micromobility, cycling, and walking-into integrated transport systems in order to fight congestion and pollution and hence increase quality of life.
  • In this respect, 2019 certainly has been the year of many cities’ announcements of their future mobility visions, including micromobility.
  • With micromobility being a nascent market in Europe, many start-ups introduced shared e-scooters in European cities.
  • Our base-case estimate of the shared micromobility market across China, the European Union, and the United States is … $300 billion to $500 billion in 2030 [Exhibit 10].
  • To put that into perspective, it equals about a quarter of our forecasted global shared autonomous-driving market potential of roughly $1,600 billion in 2030.”

Exhibit 10 -

  • In the United States, the growth of e-hailing services certainly brought challenges, such as congestion.
  • E-hailing is already having a major impact on cities and suburban areas. Ridesharing is not simply a substitute for traditional modes of automobile transportation, such as personal vehicles, taxis, and rental cars.
  • On the contrary, fully one-half of all ridesharing trips would not have been taken but for ridesharing [Exhibit 11].
  • In the face of such challenges, some cities are taking aggressive action, including capping total hailing licenses and setting wage floors for drivers.”

Exhibit 11 -

The 2020 and beyond outlook

One thing that is certain is the fast-changing world of future mobility. We do expect that 2020 will be at least as interesting as 2019 along several dimensions:

  • Consumers. As CO2 regulations in Europe kick in next year and more EVs need to be pushed onto the road, 2020 will be an important year to measure the reinforcing power of electrification. Early adopters love their EVs, but will followers as well? Will OEMs and their suppliers manage to make their EV supply chains as efficient, robust, and sustainable as those of their conventional vehicles? And will the charging infrastructure keep pace with the growing EV demand? Not to forget: How will automakers and suppliers manage to smooth the transition of their workforces and investments from an ICE world to one with partially or fully electric power trains?
  • Technology. Might 2020 be the year in which more attention is given to the transport of goods? The commercial-mobility segment could catalyze some noteworthy developments. The first of two examples here is autonomous driving in the context of shared mobility. Specifically, the replacement of the driver cost is a significant element of the total cost of ownership. Hence, we see significant activity from established players and start-ups in order to make this happen. The second example is alternative power trains. With close to 20 countries now having announced national road maps for hydrogen and major investments announced across industries-including in the heavy-duty, long-distance transport sector-the fuel-cell technology begins to become a more feasible alternative.
  • Market and competition. 2020 will be characterized as the year of the intensifying “double mobility transformation,” with players operating in an economic slowdown but, at the same time, needing to rethink their business models in a time of heightened city regulation, technology disruptions, and changing consumer needs. How will the financial market look at industry players? It’s a broad range, from the discounted OEMs on one end to the celebrated tech players on the other.
  • The growing role of regulation. For many players and for many technologies, cities will be the most important stakeholders. From “sticks” (such as parking fees, low- or no-emission zones, and city tolls) to “carrots” (such as piloting new robo-taxi or -shuttle service-mobility solutions), it will be cities where the future of mobility will be decided. And 2020 will likely see bold announcements by cities to change their mobility systems.
  • If Netflix’s business model were applied to urban transportation, how might that change the way city dwellers get around ? That’s the question at the heart of the Future Of Mobility, which aims to make it unnecessary for any city resident to own a private car by 2025.
  • By 2030, almost 60% of the growing global population will live in cities. As technological innovations in the form of electrification, connectivity, and autonomy advance, the way people move around urban environments is set to change dramatically. New business models (such as rideshare platforms), increased urbanization, and the growth of “megacities” — those with over ten million people — are already changing traditional mobility patterns. This presents opportunities for both the public and private sectors to capitalize on the growing cross-industry shifts taking place.
  • Our research focuses on how social, economic, and technological trends will evolve by 2030 to disrupt mobility at the local level. While globally, mobility systems will look similar to how they do today, we anticipate significant differences across individual cities based on local conditions and needs. There are approximately 50 urban areas expected to lead the way in mobility innovation and reveal the effects across areas that include power systems and use of public space.

Projected Impact

  • An integrated perspective is critical for key stakeholders to adopt since the various mobility trends — infrastructure, autonomous driving, connectivity, decentralization of energy systems, electrification, shared mobility, and public transit — are interrelated and will affect both consumers and businesses alike. Each of the mobility trends should be evaluated to understand the eight reinforcing impacts they bring, which will vary in pace and scale across geographies. Such examples include the growth of vehicle electrification due to increased mileage from shared mobility. Vehicles used for ride hailing accumulate annual mileage of 70,000 versus 13,500 from the average private vehicle in the US. The higher the mileage (that is, utilization), the lower the total cost of electric-vehicle (EV) ownership, resulting in their increased demand.

Integrated Trends

  • Four future-oriented fields are set to radically change the nature of mobility: greater vehicle connectivity, advances in autonomous driving, the development of digital mobility an d transport services, and electric mobility. Our goal as one of the leading vehicle manufacturers is to become a leading provider of mobility services. Every strategic action revolves around one thing, the customer. So also for the future, we will only be as successful as our products and services are in the market
  • With a global adoption of hybrid and fully electric vehicles, where will the increased demand for energy come from? Most major European countries, North America, and Asia are still heavily reliant on non-renewable sources. Combine this with the process of mining lithium: how do we ensure that electric vehicles contribute to lowering global emissions and not simply shifting them elsewhere?
  • In this stream, we will discuss the infrastructure requirements needed to service the demand. How will the energy companies and the fuel giants adapt to meet the rise in EV use? Charging technologies will need to advance quickly, speed and efficiency being key drivers, and become available for widespread use. We will explore the development of wireless charging technology and roads that will generate electricity to provide circular renewable energy for the future of mobility.

Alternative and renewable energy sources, including fuels, hydrogen cells, and carbon-neutral technologies, will also be presented and discussed.

  • Deployment of (mass) low speed (autonomous) air travel in and between cities ( Urban and Interurban EvTol air mobility ) : As demand for transportation continues to increase to levels of chaos and gridlock, alternatives to ground-based transportation are starting to emerge for urban and inter-urban travel and commuting. So-called ‘flying taxi’ projects are fully underway in companies including Airbus, and Boeing (Aurora) and Bell are fully engaged with multiple projects, while the two of the front-runners at present — have already presented static versions of their autonomous air transport vehicles. In both the latter cases, these air transit ‘taxis’ are beyond the concept stage and already in the trial and test stages of development.
  • Autonomous cars are trains and why trains cannot compete using 200-year-old technology ( mass deployment of autonomous vehicle : The timescales for mass autonomous driving remain unclear. What we know is that this is not an ‘if’ scenario, merely a question of when, and in the meantime the question is one of transitioning from ADAS to fully autonomous vehicles. Autonomous vehicle deployment could spell the end for high-speed rail and investment in expensive long-distance rail projects would be better spent on developing ultra-high speed highways for urban and inter-urban platooning, and on-demand underground and surface autonomous vehicle networks.
  • Changing Landscape For Automotive Industry : For car manufacturers autonomy has the potential to give rise to anonymity. The challenge for the future will be in brand re-definition and identity. Many are already discussing the move from being a car manufacturer to a transport service provider and how customers will change their perspective of what they are buying. Service and brand both have the potential to be redefined. This is an opportunity as opposed to the end of the road!
  • 5G-Delivering high fidelity communications networks : transportation network will be revolutionized by high-fidelity, low-latency, high-capacity, secure 5G networks. Cybersecurity failsafes and a reliable, high-density network will be a must. When transportation and vehicles are equipped with 5G connectivity, it will transform the way we travel. Vehicle-to-vehicle and vehicle-to-infrastructure communication will make roads safer and more environmentally friendly while allowing dynamic traffic management and control in congested cities. 5G will be fundamental to the development and deployment of driverless vehicles, MaaS, ridesharing, and more efficient public transportation solutions, as well as unlocking many other applications and benefits.
  • Energy — Powering The Future of Transport : With a global adoption of hybrid and fully electric vehicles, where will the increased demand for energy come from? Most major European countries, North America, and Asia are still heavily reliant on non-renewable sources. Combine this with the process of mining lithium: how do we ensure that electric vehicles contribute to lowering global emissions and not simply shifting them elsewhere? In this stream, we will discuss the infrastructure requirements needed to service the demand. How will the energy companies and the fuel giants adapt to meet the rise in EV use? Charging technologies will need to advance quickly, speed and efficiency being key drivers, and become available for widespread use. We will explore the development of wireless charging technology and roads that will generate electricity to provide circular renewable energy for the future of mobility. Alternative and renewable energy sources, including fuels, hydrogen cells, and carbon-neutral technologies, will also be presented and discussed.
  • Mobility as a Service : Finnish capital city Helsinki aims to make private vehicle ownership redundant by 2025, and other cities will follow. By offering a digital service that integrates the entire transportation network and end-to-end journey planning, transportation will be made highly convenient and cashless. MaaS is the biggest disruption to all current mass-transportation providers, automotive manufacturers, rail operators, taxi firms, new mobility providers, and small-scale private providers of the last-mile transportation operations .
  • Quantum Shifts that shall radically transform surface congestion : Macro adjustments would make significant changes to the overall sustainability and manageability of surface transport. For instance, should we be controlling vehicle size, occupancy levels and emissions to access cities? Is there a model for timed and tolled road usage? Would restricting trucks and oversized vehicles from daytime or rush hour use reduce congestion, speed traffic flow and reduce fatalities? Or could we simply employ the Swedish ‘Vision Zero’ mentality to improve road safety? New technology, such as hyperloops and underground tunnels, maglevs, and even buses and other public transportation forms that sit ‘above traffic’, have recently been shown as radical solutions.

Smart, Connected Products Are Transforming Competition

  • Information technology is revolutionizing products.
  • Once composed solely of mechanical and electrical parts, products have become complex systems that combine hardware, sensors, data storage, microprocessors, software, and connectivity in myriad ways.
  • These “smart, connected products” — made possible by vast improvements in processing power and device miniaturization and by the network benefits of ubiquitous wireless connectivity — have unleashed a new era of competition.
  • Smart, connected products offer exponentially expanding opportunities for new functionality, far greater reliability, much higher product utilization, and ca pabilities that cut across and transcend traditional product boundaries.
  • The changing nature of products is also disrupting value chains, forcing companies to rethink and retool nearly everything they do internally.
  • These new types of products alter industry structure and the nature of competition, exposing companies to new competitive opportunities and threats.
  • They are reshaping industry boundaries and creating entirely new industries. In many companies, smart, connected products will force the fundamental question, “What business am I in?”
  • Smart, connected products raise a new set of strategic choices related to how value is created and captured, how the prodigious amount of new (and sensitive) data they generate is utilized and managed, how relationships with traditional business partners such as channels are redefined, and what role companies should play as industry boundaries are expanded.
  • The phrase “internet of things” has arisen to reflect the growing number of smart, connected products and highlight the new opportunities they can represent. Yet this phrase is not very helpful in understanding the phenomenon or its implications.
  • The internet, whether involving people or things, is simply a mechanism for transmitting information.
  • What makes smart, connected products fundamentally different is not the internet, but the changing nature of the “things.”
  • It is the expanded capabilities of smart, connected products and the data they generate that are ushering in a new era of competition.
  • Companies must look beyond the technologies themselves to the competitive transformation taking place.
  • The smart, connected products revolution and its strategic and operational implications.

The Third Wave of IT-Driven Competition

  • Twice before over the past 50 years, information technology radically reshaped competition and strategy; we now stand at the brink of a third transformation.
  • Before the advent of modern information technology, products were mechanical and activities in the value chain were performed using manual, paper processes and verbal communication.
  • The first wave of IT, during the 1960s and 1970s, automated individual activities in the value chain, from order processing and bill paying to computer-aided design and manufacturing resource planning. (See “How Information Gives You Competitive Advantage,” by Michael Porter and Victor Millar, HBR, July 1985.)
  • The productivity of activities dramatically increased, in part because huge amounts of new data could be captured and analyzed in each activity. This led to the standardization of processes across companies — and raised a dilemma for companies about how to capture IT’s operational benefits while maintaining distinctive strategies.
  • The rise of the internet, with its inexpensive and ubiquitous connectivity, unleashed the second wave of IT-driven transformation, in the 1980s and 1990s (see Michael Porter’s “Strategy and the Internet,” HBR, March 2001).
  • This enabled coordination and integration across individual activities; with outside suppliers, channels, and customers; and across geography. It allowed firms, for example, to closely integrate globally distributed supply chains.
  • The first two waves gave rise to huge productivity gains and growth across the economy. While the value chain was transformed, however, products themselves were largely unaffected.
  • Now, in the third wave, IT is becoming an integral part of the product itself. Embedded sensors, processors, software, and connectivity in products (in effect, computers are being put inside products), coupled with a product cloud in which product data is stored and analyzed and some applications are run, are driving dramatic improvements in product functionality and performance.
  • Massive amounts of new product-usage data enable many of those improvements.
  • Another leap in productivity in the economy will be unleashed by these new and better products.
  • In addition, producing them will reshape the value chain yet again, by changing product design, marketing, manufacturing, and after-sale service and by creating the need for new activities such as product data analytics and security.
  • This will drive yet another wave of value-chain-based productivity improvement.
  • The third wave of IT-driven transformation thus has the potential to be the biggest yet, triggering even more innovation, productivity gains, and economic growth than the previous two.
  • Some have suggested that the internet of things “changes everything,” but that is a dangerous oversimplification.
  • As with the internet itself, smart, connected products reflect a whole new set of technological possibilities that have emerged. But the rules of competition and competitive advantage remain the same.
  • Navigating the world of smart, connected products requires that companies understand these rules better than ever.

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